In 1895, the first Putting Green Championship was held. The winner’s prize money
ID: 2761339 • Letter: I
Question
In 1895, the first Putting Green Championship was held. The winner’s prize money was $240. In 2014, the winner’s check was $1,440,000.
What was the percentage increase per year in the winner’s check over this period? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)
If the winner’s prize increases at the same rate, what will it be in 2031? (Do not round intermediate calculations. Round your answer to 2 decimal places, e.g., 32.16.)
In 1895, the first Putting Green Championship was held. The winner’s prize money was $240. In 2014, the winner’s check was $1,440,000.
Explanation / Answer
1. FV=PV(1+r)t solving that for r ,
r=( FV/PV)1/t - 1
Here t= 2014-1895 = 119 years
r =( $1,440,000/$240) 1/119 - 1
r = 1.0758 - 1
r = 0.0758 or 7.58%
2.FV=PV(1+r)t here t= 2031-2014 =17 years
FV = $1,440,000(1.0758)17
=$1,440,000 (3.4653)
=$4,989,975.17